Deflation

Deflation means prices are falling over time. In simple terms, the same amount of money can buy more than before. It may sound good at first, but deflation can be a warning sign for the economy. If people expect prices to keep falling, they may delay spending, and businesses may earn less money. For example, if a product costs $100 today but people believe it may cost $90 later, they may wait before buying it. Deflation is not the same as lower inflation. Lower inflation means prices are still rising, but more slowly. Deflation means the overall price level is actually falling.